Own the Last Mile 172
jonabbey writes "Robert X. Cringely's most recent column advocates a radical solution to the network neutrality thicket: create our own last mile infrastructure, rather than paying the telcos and cable companies to use our bandwidth as a lever. From the article: "A model in which the infrastructure is paid for as infrastructure -- privately, locally, nationally, and internationally can create a true marketplace in which the incentives are aligned. Instead of having the strange phenomenon of carriers spending billions and then arguing that they deserve to be paid, we'd have them bidding on contracts to install and/or maintain connectivity to a marketplace that is buying capacity and making it available so value can be created without having to be captured within the network and thus taken out of the economy."
wireless (Score:5, Informative)
Re:The real problem (Score:5, Informative)
As to the inter-city hauls, those are already available at decent rates once you get your local bits to a nearby POP.
Sayeth the Cringe (I RTFA):
The whole point of the article is that by doing the expensive (relative to a consumers monthly ISP bill) last mile infrastructure ourselves, we avoid the rent seeking behaviors of the current last mile owners who are more in the business of monthly billing events than transporting packets. If you pay $50 a month for broadband and the part of that service between your local POP and the rest of the world currently runs about $2 per month, what exactly do you get for that other $48 per month? Email service? Blocked server ports? The ability to get a less comprimised QoS by paying more?
Cringe thinks we could, over a 10 year period, finance fiber to your door with crazy local bandwdith (basically free) and cheap metered Internet service (for what you use today, not necessarily what you might use when you can do BitTorrent at 100Mbit/s symetrical) for about $20 per month if you and your neighbors worked collectively. At that point, ISPs and TV providers would be more likely to beat a path to your "last mile" door since the really really expensive part was already built by someone else (you) who doesn't discriminate against them like the Bells would against CLECs.
Re:The real problem (Score:4, Informative)
I thought this is about the last mile, not the backbone. You can tie into the the internet without having to make your own connections between two major cities.
Re:Mesh (Score:3, Informative)
Today's prime rate is 8.25%
And 10-year municipal bonds are currently 5.125% - which is the rate this would actually be financed at. http://www.bloomberg.com/markets/rates/index.html [bloomberg.com]
Monthly payments over 10 years of $16/month on initial capital of $1,500. http://money.guardian.co.uk/calculator/form/0,1456 ,603156,00.html [guardian.co.uk]
RONJA & Free Space Optics (Score:4, Informative)
Cost can be a problem, because it's strictly point-to-point, and you need a transceiver at each end of each link. That can rapidly add up to a lot of transceivers. And commercial transceivers are expensive. By comparison, the RONJA device can be made very cheaply, in terms of components costs -- but they take a lot of skilled labor to assemble. Check it --> http://en.wikipedia.org/wiki/Ronja [wikipedia.org]
The good news about FSO costs is, the network can start small and add one node at a time, and not have to pay the full up-front costs of something like laying fiber.
The other problem is that FSO has limited range and is strictly line-of-sight. Depending on terrain, trees and buildings, you may have to be pretty ingenious in placing the transceivers, and you might need towers or repeaters in some instances.
I am looking forward to Wi-Max, by the way. That's another technology with potential to change things.
Re:How would Cringely's model work? (Score:1, Informative)
"run Fiber To The Home (FTTH) and pay for it as a community of customers -- a cooperative."
Reminds me of a marketing manager who specified he needed "1 fiber optic strand" because he wanted his department's LAN to be fiber-based. There are numerous standards and approaches here, especially when you assume switching at the block level which is the only way to reduce the cost somewhat (rather than carrying each strand back to the central office which would be more than $50K per mile in metro areas, $20K/mile rural).
The cost per fiber drop, according to Bill's estimate, is $1,000-$1,500 if 40 percent of homes participate.
That's what you put in the marketing plan. The reality is around $2500 to $3500 per subscriber.
Using the higher $1,500 figure, the cost to finance the system over 10 years at today's prime rate would be $17.42 per month.
You don't use prime as your hurdle (or "weighted average cost of capital" as the finance types would say). Prime is an interest rate for investments/loans that has little risk. Even though you could have a municipality promoting this financing via bonds, they'll certainly be tied to service revenue and correlate with the speculative FTTP venture. I'd use 3% or 4% over the risk-free rate (e.g. 90-day T-bill) at a minimum. The "higher" $1500 figure isn't accurate in any model I've seen that actually got constructed, and does not include switching center and central office systems, consultant fees (not cheap - several million for a community project and necessary to structure and raise the debt) and a whole slew of other costs.
A model that went forward recently in our part of the central US had: $10 million in RUS low-interest debt at 7% (low-interest respective to high default risk), plus a revenue assumption that they would recover cashflows of $28 per subscriber over 10 years, with 80% market penetration required, in a community with 12,000 households and a healthy commercial and industrial base heavily subsidizing it with service premiums (they assumed the businesses would pay much more than alternatives because they could have telecommuters across the faster local fiber network than generic Internet transport). That's $2400 per subscriber, assuming an unrealistic 80% penetration and business subsidy via overpaying for service. Throw that out and you're definitely in the $2500 to $3500 range, on an estimated 9,600 subscribers.
Other problems include consultants that are the low bidders, only to discover they have an agenda which includes selecting specific hardware and protocols only their ISP "friends" use and using other methods to lock in only a select few ISPs. In one case we dealt with, the consultants required that ISPs wanting to serve a FTTP small town in the midwest to lease DS3s to California, then pay an inflated rate to share an OC3 leased back to the midwest. We had DS3s just down the road 8 miles from the town but would have to go to LA and back (never mind latency) to serve the town. Unfortunately these projects have to obtain these consultants because they can't float any bonds without demonstrating some competence in the plan.
Add to that the law enforcement demands for network surveillance capability and the whole slew of engineering, support, provisioning, billing, etc. overhead and you're left with a business model that unfortunately will only be serviced by large national companies.
What we'd get for our $17.42 per month is a gigabit-capable circuit with no bits inside - just a really fast connection to some local point of presence where you could connect to ANY ISP wanting to operate in your city.
His proposal is in line with IEEE-USA proposals (Score:4, Informative)
http://www.ieeeusa.org/policy/positions/broadband
and
http://www.ieeeusa.org/volunteers/committees/ccip
The fact is that the US is being dumbed down with respect to broadband technology. The Washington Post recently had an article stating that Koreans feel like they are going back to the past, telecommunications-wise, when they come to the US.
Real broadband is gigabit or better, bidirectional, to the end user. Ownership by end-users may be the only way we can achieve it. Content and bandwidth should be separated, with nobody other than end users allowed to provide both.
Re:cream skimming (Score:3, Informative)
Re:Mesh (Score:1, Informative)
And a 1-year T-bill with essentially zero default risk (and the same interest rate risk) is 5.24%...
Financing at your general obligation muni rate is unlikely for speculative muni projects, especially when they'll be structured as revenue bonds. A good explanation of the difference can be found here [bondtrac.com] - pay special attention to the Risk section.
Indeed, the interest income/tax considerations will lower the bond's nominal rate for investors that can take advantage of the tax exemption. However, changes in the tax code have also reduced the opportunity for tax benefit (e.g. alternative minimum income tax impact) and munis that have any risk associated with them are increasingly viewed as undesirable investment instruments.
Given the current market condition for bonds, a municipality that attempts to float revenue bonds for speculative FTTP ventures without a serious default and interest rate risk premium is only going to find local investors that see the purchase as a non-investment "contribution to a good cause." In this case, either support the project with local gifts or pursue payment through local usage fees - don't expect outsiders to gift funds for your muni project (without serious political contribution gifts for earmarks!).
Never forget that investors have alternatives for their money, and they expect more return for more risk.
CLEC (Score:3, Informative)
Re:meeting halfway (Score:2, Informative)
What is the distance from the nearest town we are talking about ?
I know a guy who lives 4 miles from the nearest town together with other 4 families. local telco told them - dial up access only and they have it at 19200kBits/s or roughly 2KBytes/s symmetrical. This guy has a friend in that town. They installed an amplifier ($100), two WiFi routers ($150) and made focused antennas from cans of coke (they drunk the coke, so the antenna is free). It took a week to install and focus the antennas (they used GPS and all lot of phone calls), but eventually 4 families got 10Mbits connection to the ADSL connection (2Mb/s down 100Kb up) in the town and improved theis access by 10 times. Monthly bill is $60 (for all of them).
Theoretically with 2W amplifier you can beam the WiFi signal to the Moon. you can find lot of information related to the antennas on the net.
Why not to hire a T1 links at 1-2K/month each (rent an appartment in the town if required) and beam WiFi to your community ?
Another way to go is WiMax solutions like those from Alvarion - contact the guys. may be they will sell you an access point. At $200 (if my memory still serves) per connection i think it can be a nice alternative or at least a good base for bargain with local telco. The setup is the same - appartments in the town, a dish in the window, another dish in 10 miles across and you get that 10Mb-20Mb connection depending on the weather conditions, distance, etc.
Why the Last Mile Isn't Enough (Score:3, Informative)
To begin an argument that the internet, its infrastructure and its service providers on top, should be managed by the government begins by looking at another feat of the government arguably one of the greatest wonders of the modern era - the interstate highway system. Initial estimates cannot begin to measure how the interstate highway system has spawned billions if not trillions of dollars in the economic wealth of the United States. A system in which on every exit, capitalism is freely excercised as both large and small business take advantage of the rapid and ease of transportation. Yes, undoubtedly maintaining this infrastructure is quite expensive, but to allow private enterprise or even state governments to maintain such a critical asset to the American economy would only become a set back to the economic greatness of this country. Similarly, the next great advancement and opportunity for capitalism to spread is the internet and why the government should own this infrastructure and through taxation of public companies that benefit from its service make the internet free for all citizens.
My argument rests on the following points:
As this infrastructure increases its important within the American economy it also becomes the target of cyber-thieves and terrorists. As such in order to protect the majority of society the need to ensure the internet infrastructure is safe from attack as well as to protect citizens from being exploited by clever thieves is an expensive burden that society must take. At the same time, the constitutional rights of citizens to use this as mechanism of freedom of speech must be maintained. Does privitization guarantee this safety? How does the government encourage innovation if there is no monetary incentive to do so?
Let us look at other examples in the world in which because of the privatization of our communication infrastructure the American economy has suffered at hands of other countries who don't have the baggage hindering innovation. Without a doubt our wireless infrastructure is this country is years behind the rest of the world such as China and Japan. Only recently as cellphones have begun to proliferate have large telecoms shifted gear and began investing in our wireless infrastructure mostly driven by technology created overseas. As this technology advances we still see limitations in service between telecom companies as simply driving across one's own city, you may experience outages and/or leave the area covered by your cell carriers service. Wouldn't it be nice if you could purchase a cellphone from any vendor of your choosing and it would function on any network? If the government owned this infrastructure it could force companies to adopt standards that favor consumers. Would we have digitial television had the government not forced the broadcast companies and television companies to adopt the new standard?
Companies have repeatedly demonstrated in the past the reluctance to spend money on infrastructure or innovation unless given authority by the government to mo